I was having a discussion the other day with a client about changes in the software industry. We got to talking about different trends when the subject turned to the current tendency of discussing business software in terms of the size of the company that uses it. “Enterprise” software has certainly gotten a lot of play, though the “SMB” and “mid-market” descriptors have also been well aired out, and, in aggregate, those two groups might outspend the enterprise today.
Interestingly, when I ask people what came before the small-medium-large connotation their faces go blank, but really, it hasn’t been that long since vendors described their solutions as “strategic.”
The Evolution of Strategic Software
Remember strategic software? It was the stuff that made big enterprises run, and, most importantly, it almost always ran on a mainframe. Big iron. Strategic software usually encompassed accounting, finance and manufacturing applications, and from a certain myopic perspective, if the C-level officers wanted it, then it must have been strategic. In part, though, using the strategic descriptor was also a ploy to prop up mainframe sales at a time when other less expensive platforms were coming on strong.
At that juncture there were a lot of computing choices coming to market such as mini-computers, and servers and networks were beginning to make themselves felt — though real computer guys thought of them as toys. Well, no one could stop the eventual shift to smaller and less expensive computing, and the software that ran companies eventually had to run on all sorts of platforms. Wordsmiths had to retrench and strategic became enterprise and today we have what followed that.
Nothing is permanent in this industry and the idea of enterprise software hit its zenith in the late 1990s when lots of companies finally had to swap their mainframes with two-digit date tracking for new systems that could handle the millennium change. As the Internet took off, the focus on small or emerging companies was the fashion. Every kind of software imaginable was thought to be useful to an enterprise and our current small-medium-large regime took hold.
What’s the point of all this? Well, I think that the idea of strategic software is in need of rehabilitation, a new coat of paint, and a full tank of gas.
While enterprise software has been in vogue, the easiest way to sell it has been to show that it saves money. Selling that way simply meant proving an ROI any way you could. Now, don’t get me wrong, ROI is important, sort of, but it’s also rather tactical in many cases, and in my humble opinion, we have overdone it going from a focus on the strategic to a focus on the tactical. Focusing on the tactical is not a bad thing either, in fact, it made a lot of sense at one point. Once the big strategic issues are settled, a market will naturally settle into an era of tinkering around the edges, looking for a few percentage points of improvement here and there. I think that era is over though.
We are in new era in which strategy is vitally important. This time strategy is focused on retaining customers and driving loyalty, rather than gaining new market share. In this new world, there are lots of software choices, many opportunities and too many potential pitfalls. As I have said elsewhere, the market is different and so is today’s customer, and the business processes that support the new reality cross departments and areas of responsibility. The software that supports these processes must also cross those boundaries and even more critical, it often must cross vendor divisions too.
Crossing the lines that separate vendors has never been easier or timelier. No software vendor today can possibly provide world class solutions for every business contingency. There are new vendors and new technologies growing up in the cracks between the conventional CRM stovepipes, and they represent the missing parts of end-to-end business processes.
A growing number of integration solutions and platform providers are making themselves felt, and with that comes the opportunity to integrate what I refer to as meta-applications. In earlier times, when you wanted to integrate solutions from two vendors for the purpose of providing more of an end-to-end business solution to your customers, you bought the company, but not anymore. Today, you can achieve the same effect by being standards-based and by working with other vendors that adhere to the same set of standards, and that is becoming easier.
The state of the art seems to be mash-ups between application vendors and things like Google Maps, but I have a feeling that in a Web 2.0 world we will see more exotic — and strategic — combinations between multiple vendors as they define new business processes. That’s why I think strategic software needs to be rehabilitated. The difference this time is that standards and platform technologies are making it possible for any company to map its strategy into software with the assurance that there will be vendors out there who can make the strategy reality.
Denis Pombriant runs the Beagle Research Group, LLC, a CRM market research firm and consultancy. Pombriant’s research concentrates on evolving product ideas and emerging companies in the sales, marketing, and call center disciplines. His research is freely distributed through a blog and Web site. He is working on a book and can be reached at [email protected]